Fairer Council Tax: consultation analysis

Analysis - Question 6: Please tell us how changes to Council Tax rates for properties in Bands E, F, G and H might impact you, or the people your organisation represents.

Qualitative analysis

There were 14,805 responses to this question: 7% from respondents in Bands A-D, 88% in respondents in Bands E-H and 5% from respondents who did not report their Council Tax band. Following standard practice, responses were categorized into a set of labels/themes and displayed and summarized in decreasing order of importance/relative frequency.

Timing of implementation during a cost of living crisis, particularly for vulnerable groups

Many respondents felt that changes to the current Council Tax scheme could have an impact on their cost of living for themselves or their families. They argued that not all residents of properties in bands E-H had high levels of income (referring to “asset-rich, cash-poor” households). As a result, these respondents said they might have to dip into their savings or cease contributions to pensions and other forms of future financial security to absorb the financial demands of a higher taxation scheme.

“The current cost of living crisis - meaning that average earners who may be living in/ renting accommodation in this category are paying substantially more for food for their families, household heating, travel to work, out-of-control mortgage and rent increases and raised prices for all other household bills - has already had a very damaging impact. As this crisis deepens, debt and borrowing by individuals is likely to increase, leading to personal debt crises. […] The increases proposed are not small increases - they are very, very substantial cost increases that families will be asked to pay - with what?” (Individual, no local authority or band provided)

“I will end up paying more, by around £500 per annum. I am a pensioner and have no scope to increase my income to pay for this. I will inevitably have to use my savings.” (Individual, Fife, Band G)

Individual respondents frequently discussed their own challenging financial circumstances and stated they could not find the disposable income to cover the proposed Council Tax increase.

“Even though we are retired and living on state/private pension we are not eligible for any reductions from the Council Tax Reduction Scheme. This is due to us having savings which we earned during our lifetime of work. Considering we may have to pay £440.63 pm (over 10 months), this is a sizeable proportion of our monthly income. Due to the current cost crisis all our costs have risen and although we received a reasonable state pension increase it does not cover all these additional costs. […] Every month we use savings to supplement our income which I believe is unfair.” (Individual, Aberdeen City, Band G)

“I am a charity worker and my partner is a police constable. […] We are financially prudent, we work hard and save where we can. Our council tax is already very high. Energy costs as you know have been high over the last 18 months. I work from home, so we have increased energy costs in the winter. […] We do not have children yet and likely could not afford them in the current climate. Our mortgage is currently manageable but we do not know what we will be facing when our fixed term is up. We could pay the 12.5% increase in council tax, and would not qualify for the reduction scheme, but it would severely limit our budget, alongside the multitude of further rising costs. We are concerned that when the patchwork of rising costs comes together, living in our home may no longer be affordable to us.” (Individual, East Lothian, Band F)

In addition, respondents referenced specific vulnerable groups such as older individuals, pensioners, retirees, mortgage holders, individuals with fixed or insufficient income and families composed of single parents, numerous dependents or with disabled members. Both individuals and organisations mentioned that they thought these groups of people could face significant challenges in absorbing the financial impact of an increase in council tax, potentially making them more susceptible to poverty or debt.

“We are concerned that given the current cost of living crisis, many over 50s on low and fixed incomes are at risk of falling into poverty and/or debt. […] Over a number of years, we have heard that Council Tax is a bill which many older people struggle to pay. […] To hike charges for higher Council Tax bands as a means of boosting income for local government will fail many older households. Often older owner occupiers live in homes which were family homes – although these properties have often accumulated value, this does not mean householders have the financial liquidity to pay hugely increased Council Tax bills in addition to other potentially higher bills, such as energy costs.” (Organisation)

“I am a single parent of three children, one of whom has just turned 18 and therefore I have now lost my 25% discount. My payments have jumped to £368 per month during this cost of living crisis. […] I cannot comprehend how you expect someone like myself, a single parent, to be able to afford any further increases and survive with my children.” (Individual, Renfrewshire, Band G)

Possible negative effects on housing security

Both individuals and organisations expressed concern that the proposed tax increases might make it unaffordable for some people to continue living in their current homes. These respondents believed that if respondents could no longer afford their current homes, some might need to sell their properties and seek more affordable housing options, downsizing in the process.

“We have significant concerns on the impact this proposal could have and can only anticipate that this will push a significant number of those renting properties to the brink of housing insecurity / requiring to move within an already overcrowded housing market / at risk of homelessness / experiencing homelessness.” (Organisation)

“Potentially we will need to sell up and buy a smaller property with a lower tax band as already we struggle to pay the increasing cost of living. As a family of 5 we have 4 bedrooms and would need to give this up to afford another increase to monthly bills.” (Individual, Glasgow, Band E)

Possible negative impacts on the market for properties in Bands E-H

Some individuals emphasized that the policy could negatively impact the demand for housing in Bands E-H, potentially affecting the health of the real estate market within those areas. For instance, some respondents in bands A-D stated that the policy might make it more challenging or less appealing for them to consider purchasing properties in Bands E-H.

“We have been looking to move and have been looking at properties in bands D and E. There are often just small differences between D and E, often one extra bedroom, or a slightly bigger kitchen or a slightly bigger garden. However, after previous council tax increases we are mindful of the way the Scottish Government views Band E property owners as rich and therefore a repeated source for extra taxation, so we are not going to buy a property in band E.” (Individual, South Ayrshire, Band D)

“[…] we have no major savings and are finding the ability to move on from our ‘first time buy’ is hampered by the cost of the Council Tax bands relative to properties available of a decent size.” (Individual, East Lothian, Band C)

Other respondents believed that if individuals were less willing to purchase Bands E-H properties due to the proposed increase, this could make it difficult for households in Bands E-H to sell their property and downsize to a more affordable property in a lower tax band. Some respondents expressed a similar concern about the overall tightening of the housing market, in which the proposed increase could exert downward pressure on property prices within Bands E-H.

“This will have a detrimental effect on the housing market as a whole during a cost of living crisis. Those in larger houses who are currently struggling to pay increased mortgages will be unable to sell their property and downsize in an attempt to manage their bills and the demand for larger properties will plummet when the council tax figures are made available to potential buyers.” (Individual, Falkirk, Band F)

“[…] This proposed change will make bigger properties more difficult to sell. There will be situations where household income suddenly drops (e.g. bereavement or retirement) [and] council tax becomes unaffordable but the property won't sell.” (Individual, Fife, Band F)

“Real estate agencies and property developers might face a more sluggish housing market, particularly in the higher bands, due to potential buyers being discouraged by the higher ongoing costs of owning properties in these bands.” (Individual, Falkirk, Band F)

Potential impact on household spending and budgeting

Many individual respondents believed that they would potentially need to reduce their expenditures to cope with the increased tax burden from the proposed increase. Most respondents expressed this in general terms: stating that cuts would need to be made but also mentioning uncertainty around where cuts would be made.

“Increases in this area would take more money out of my budget which helps provide healthy food, a warm home and clothing for my children. Like every family in Scotland we are facing increasing pressure to make our incomes/outgoings match. We aren't a family that can go on holiday when we choose or go out every weekend. We buy our food from lower budget supermarkets like Aldi and Home Bargains....so where do we cut back anymore?” (Individual, Aberdeen City, Band E)

Some respondents provided more details on how they could potentially respond to the proposed increase, mentioned needing to rely more on foodbanks or reduce spending on essential areas like heating.

“I will be using the food banks more regularly and be even less able to heat my house and feed my children despite myself and my husband working full time. […] The price of everything including mortgages and food has increased with no increase in wages. I struggle monthly to find £330 to pay it. I will not be able to find an extra 17%.” (Individual, Fife, Band G)

“I live in a rented, rural property, and am responsible for council tax. My property is band F but is an old farmhouse with a single bathroom. […] I am already worse off as my salary has not been keeping pace with inflation (like a lot of people) and I don't actually know how I would be able to afford this proposed increase - probably by not heating my house.” (Individual, Perth and Kinross, Band F)

“We are under real pressure but do not qualify for help. These proposed increases will make it even tougher. We know we will need to make tough choices if this happens - use heating less in winter, cut back on broadband/mobile and other services, spend less on food, etc.” (Individual, East Ayrshire, Band G)

Respondents also mentioned they might have to reduce expenses that directly affect the education and quality of life of their children as a result of the proposed increase.

“We also have a one year old kid who can't go to nursery because we can't afford it and a huge mortgage which will increase from £570 a month to £1,127 a month from November […] I find this very crippling for my family and we are already considering we'll have only one child as times are very hard these days and it wouldn't be wise to have more kids, which is very sad for us.” (Individual, Aberdeenshire, Band F)

“[…] any increase in council tax rates would further strain the ability of our family to allocate funds for our child's education.” (Individual, Fife, Band F)

Some individuals indicated that they may potentially no longer be able to invest in and maintain their properties, with these respondents mentioning examples of property improvements needed for their day-to-day quality of life.

“We are a couple living on pensions in a Band G property. We would not have been in a property of this band if we had not had to look after elderly parents. Maintaining the property occupies a large proportion of our time and income, an income which is largely fixed and not keeping pace with inflation. […] Savings can only be spent once - care of the elderly, food, transport, investment in the property or Council Tax. Pick one but don't expect us to be able to meet them all.” (Individual, Dumfries and Galloway, Band G)

“[…] the likelihood is that we will need to save money elsewhere. That is, it means forgoing other expenditure[s]. Holidays went long ago. The next phase of home improvements will likely suffer, including the building of a walled garden where we might get some respite from the winds that impact our property. We will also not be able to afford the replacement windows for which we have been saving.” (Individual, Scottish Borders, Band H)

Other respondents stated that they might have to reduce spending at local businesses, and this could potentially have a negative impact on the local economy.

“We are already cutting back due to the cost of living crisis. […] Quite simply we would be forced to stop supporting local business[es] i.e. butcher, dairy farmer, green grocer in our village as they are more expensive than supermarkets.” (Individual, Fife, Band E)

“It will effectively mean that our disposable income for the month will be nearly fully depleted. We will have nothing to spend on small things like a coffee at a local business, or contribute to our local economy in a small way.” (Individual, East Dunbartonshire, Band G)

Potential impact of increase in funding for council services

Respondents disagreed about what impacts an increase in Council Tax revenue could have on provision of council services. On one hand, some respondents agreed that the Council Tax increase could result in an increase in public funds, which could potentially improve delivery of public services aimed at reducing disparities and enhancing people's quality of life. These respondents highlighted that the additional resources could be allocated to support different front-line services that had been adversely affected by previous budget reductions.

“Changes to council tax will enable local councils to generate more income, which can then fund vital public services, which have been underfunded for years. Whether that be council housing, after school clubs, libraries, infrastructure (lighting), or housing and homelessness services, our members experience every day the limit of lack of funds at the local level.” (Organisation)

“I'm currently living in a Band C property so wouldn't be directly impacted by the changes but they would protect and benefit the council services I use. Councils need more money to keep libraries and community centres open and improve public transport and active travel infrastructure […]” (Individual, City of Edinburgh, Band C)

“As a local government employee, I see firsthand the impact of budget cuts to council effectiveness. I therefore see this rise, targeted at those who can most afford it and who still use council services like the lowest paid in society, as being a fair way of ensuring councils can provide the level of service ALL residents deserve.” (Individual, Renfrewshire, Band D)

Conversely, other respondents raised concerns that the proposed Council Tax increases could also lead to increased reliance on both public and charitable services by the general population. Some respondents thought that the proposed increases could potentially increase demand for services from food banks, the money advice sector, mental health services or council housing. These respondents pointed out that the increase in Council Tax might have an uncertain effect on public funds due to an increase in demand for public services, which could require higher public expenditure to meet this increased demand.

“This is going to [have] a serious impact on the mental health of families who are already struggling with the cost of living crisis, increased energy prices and are having to rely on food banks. Many will be unable to pay their rent or mortgage with this increase and homelessness will undoubtedly increase which goes against current efforts to reduce it.” (Individual, Glasgow City, Band F)

“We are also concerned about the impact that this rise in Council Tax arrears will have upon the money advice sector as we know that this sector is already stretched to capacity due to lack of funding and resources. Moreover, we are hearing of more clients presenting to money advice with mortgage arrears as interest rates continue to rise. This presents two problems relating to the proposed increase in council tax: firstly, that this group may not be able to financially withstand this rise, and secondly money advisers may not be able to cope with further demand. We are therefore concerned that the sector would be unable to offer the support needed to this new group of people who would need money and debt advice to resolve their Council Tax debt resulting from this increase in rates.” (Organisation)

“For people who have been 'banded' into a bracket by the council with little to no justification, they may find that they are unable to afford their mortgages, energy and food bills […] thus pushing more people into debt and ultimately poverty.... which will in the longer term create bigger problems for the council when the demand for additional council tenancies, benefits support and mental health support sky rockets.” (Individual, City of Edinburgh, Band H)

“[…] Along with these proposals you will need to provide details of council housing stock that many people forced out of their homes due to being unable to pay this unfair tax will need.” (Individual, East Renfrewshire, Band E)

Potential impact on mental health

Respondents in income bands E-H thought that the proposed increase could add significant stress to their lives and lead to greater anxiety about the future, including their ability to financially support their family.

“All the bills in my household have risen substantially over the past 2 years. It has taken a toll on my husband and myself. We both work even longer hours and weekends to keep our heads above water and increasing the council tax will mean more pressure. […] Financial pressure is crippling and has a very detrimental impact on your mental health and I think increasing this would definitely take its toll on us as a family and many more hard working families.” (Individual, East Ayrshire, Band F)

“I am completing this at 1:20 am because I am lying awake worrying about the future and whether we will be able to provide for our son and unborn baby. We do not qualify for any government supports because we both work, yet I’m frightened we won’t be able to live.” (Individual, Fife, Band F)

Potential impacts on migration

Some individuals pointed out that the proposed changes could diminish Scotland's overall attractiveness as a place to live, potentially resulting in fewer people considering migration to or remaining in the region. Respondents mentioned this could have implications in terms of retaining skilled workers who might be attracted by more cost-effective international markets. Moreover, they thought that it might deter skilled professionals from considering Scotland as a destination for immigration, thereby affecting Scotland’s ability to attract talent that could contribute to the economy.

“[…] cost of living in Scotland at the moment, however, is making the regular employment offers from other countries more appealing. I would imagine this situation is not unique and I further believe additional increases such as Council Tax higher band increases will force many of the highly skilled workforce out of the country.” (Individual, South Lanarkshire, Band G)

“[…] Higher-paid professionals will view Scotland as a less attractive place to live and those [who] can will move elsewhere, increasing the shortages already experienced in many professions. How will this affect me, personally? I will […] be living in a country that will not be able to attract the talent necessary to boost her economy and provide the necessary professional services required to underpin the well-being of all our citizens.” (Individual, Perth and Kinross, Band G)

Potential impacts on employment

Respondents mentioned that the proposed Council Tax increase could potentially impact their approach to employment. Respondents felt that their household costs might increase to a level that could mean they might have to work additional hours, contemplate switching to a higher-paying job (such as working for the private sector instead of the NHS) or close their businesses.

“We currently pay between 240-250 per month on council tax, and for it to go even higher I would need to work more hours than I already do while juggling childcare costs, which could leave me further out of pocket.” (Individual, Aberdeenshire, Band E)

“The only alternative option we have is to leave the NHS and work in the private sector in order to negotiate a better salary […]” (Individual, Highland, Band F)

“An increase in the cost of council tax would cripple us and force us to sell our dream family home and likely mean we'd have to close our business too to try and earn more money.” (Individual, Highland, Band F)

Themes raised by councils

The most common theme raised by councils was the potential impact of a proposed tax increase on lower-income households or households whose wealth was in property (rather than income). One council thought that the existing Council Tax Reduction scheme would be insufficient to protect lower-income households. Another council believed that if the tax increase led to more difficult financial situations for low-income households, demand for financial advice services could increase, placing pressure on service provision.

“[…] it is expected there will be increased demand for Money Advice and Citizen Advice services. The impact on residents could be that their financial circumstances are worsened by the change in band ratios. […] If CTR [Council Tax Reduction] levels are increased due to the higher levels of charge in the higher banded properties for those in lower incomes, there will be a shortfall in the funding available for CTR which will adversely impact service delivery in other areas.” (Council)

The second most common theme was the potential impact of a proposed tax increase on worsening cost of living pressures. One council mentioned the potential spillover impacts the tax increase could have on other areas of spending: for example, reduced spending on leisure and sport activities could impact health and wellbeing, and reduced spending in local businesses could lead to loss of local employment and decreased vitality of town centres.

“The proposed additional costs for taxpayers in Bands E-H, particularly during a period of high inflation and challenging living costs, carry the potential to exacerbate debt concerns for a broader segment of the population. Such an outcome could increase homelessness presentations. This is particularly pronounced given the impact of the Cost-of-Living Crisis, increasing private and affordable housing rent levels, decreasing private rented stock, increasing interest rates and other economic uncertainties impacting on the Housing sector.” (Council)

“The proposed changes will increase pressures on already stretched household income and will have implications on [the] ability to spend on other opportunities and activities for some. Spending by families on Leisure and Sport activities will be impacted because of tough decisions that individuals and families will have to make. An unintended consequence may be a reduction in health & wellbeing if mitigations can’t be identified to balance this out. [Another impact of the proposed increase would be] less local spending, impacting on local businesses […] This leads to a loss of local employment, further impacting households, while also impacting on the vibrancy and vitality of town centres through business closure and vacancy.” (Council)

In addition, six councils provided estimates of the increase in Council Tax paid for specific bands, the percentage of households that would be impacted or the expected increase in revenue, while two councils said they did not have sufficient data to draw conclusions about affordability of the proposed increase for residents.

“The council does not collect or hold data that would enable robust conclusions to the be drawn regarding the affordability of the proposed changes for council tax payers in [our local authority], including the combined impact of these changes with the significant increases to the band D charge which may be needed in order to balance the council’s budget in future years.” (Council)

Finally, three councils expressed concern that the actual increase in revenue available to spend on public services could be uncertain due to potential changes in local government funding distribution arrangements.

“While this may generate an additional source of revenue to the council, as stated elsewhere, we are concerned that this may result in a reduction to other sources of funding through the local government finance settlement and the level of additional revenue generated will not be sufficient to close the budget gap in 2024/25.” (Council)